By Vanessa Mock

BRUSSELS--European Union regulators Wednesday granted conditional clearance of Finnish stainless steel company Outokumpu's (OUT1V) merger with Inoxum, the stainless steel division of Germany's ThyssenKrupp AG (TKA.XE).

The approval is conditional on Inoxum disposing of its stainless steel production facility in Terni, Italy, to allay concerns that the tie-up of the two largest suppliers of cold rolled steel products could lead to anti-competitive practices and raise prices.

In a statement, the European Commission said the commitments offered address these concerns. A number of Inoxum's distribution centers in Europe will also be sold.

"The divestment of the Italian Terni plant ensures that the creation of a new European market leader will not be detrimental for consumers and businesses in Europe," said Joaquín Almunia, the EU's competition chief.

The transaction, as initially notified, would have created a player three times larger than Aperam of Luxembourg and five times as big as Acerinox of Spain, the closest competitors and respectively the third and fourth players in the market, the regulators said.

Write to Vanessa Mock at vanessa.mock@dowjones.com

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